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After World War II, Poland was under a Soviet-backed communist regime until the Solidarity trade-union movement emerged in 1980, leading to partly free elections in 1989 and the formation of the first non-communist government in Eastern Europe. Since then, governments composed of parties descended from the Solidarity movement have alternated in power with coalitions led by the former communists, renamed the Democratic Left Alliance. The conservative-nationalist Law and Justice party (PiS) or the liberal, center-right Civic Platform have won elections since 2005, with PiS winning the 2019 parliamentary election and the 2020 presidential election.
Poland is a parliamentary republic with a two-house parliament consisting of the Sejm (lower house) and Senate (upper house), and a directly elected president who can veto legislation. A three-fifths majority in the Sejm is needed to override a presidential veto.
The Law and Justice party (PiS) prioritizes social welfare, economic nationalism, and reducing inequality. Since taking office in 2015, PiS has focused on pro-natalist policies, increasing welfare and the minimum wage, and lowering the pension age. The government is pursuing a “repolonization” program to repatriate ownership of strategic or politically significant industries by fostering their acquisition through state-owned enterprises. The state maintains a significant presence in the economy, with approximately half of the 20 largest companies by market capitalization being state-controlled.
The government’s top priority going into 2023 is to manage the cost-of-living crisis, with a series of support packages aimed at reducing the impact of high energy prices on households and businesses. The most recent measures include one-time payments for heating, price caps for gas, central heating, hot water, and electricity, as well as subsidies to enterprises. The government expects energy companies to have minimal profits in 2023, with taxpayers sharing the fiscal burden. Poland has invested in new LNG facilities and accelerated gas provision from Norway to reduce energy dependence on Russia. However, the country is expected to increase coal production to reduce reliance on Russian gas, despite the government’s climate pledges.
Poland is also shouldering the burden of a refugee crisis, with an estimated 1.5 million Ukrainian refugees having settled in the country. A new law allows refugees to stay for up to three years with access to healthcare, education, and social services. The government and local authorities spent zł 15.9bn in 2022 alone to support Ukrainian refugees, according to the Polish Economic Institute.
The ruling coalition United Right, led by the Law and Justice party (PiS), won the election, securing a majority of seats in the lower house of parliament. However, opposition parties and independent candidates won a majority of seats in the upper house. Despite this, the ruling coalition’s majority in the lower house gives them the power to enact legislation and form the government.
The relationship between Poland and the EU has been strained since 2015 due to accusations that the Polish government has undermined the rule of law. The EU established a new sanctions mechanism in 2020, and tensions increased further in October 2021 when Poland’s Constitutional Tribunal challenged the EU’s primary judicial framework. Poland’s failure to comply with an EU ruling led to a daily fine of €1m. Negotiations in early 2022 resulted in a compromise centred on repealing PiS’s previous judicial reforms, but disagreements within the coalition and among EU lawmakers persist.
Following Russia’s invasion of Ukraine, Poland has taken a strong stance and continues to strengthen its defence links with Western allies. Poland has pledged US$1.8bn in military aid to Ukraine, behind only the US and the UK. Poland has prepared for a full Russian energy cut-off by diversifying its gas supply, including through increased LNG imports from Qatar and the US and the import of gas from Norway.
Despite these efforts, rocketing gas and electricity costs will place significant strains on Polish industry, particularly metal and chemical firms. The cost-of-living crisis and the war in Ukraine have prompted the EU and the Polish government to reach a compromise on repealing judicial reforms, but many EU lawmakers believe the agreement does not go far enough in reinstating the rule of law.
